The Search for Clarity on a Key Question: Who Owns Huawei?

Those hoping for a peek inside the ownership structure of Huawei Technologies Co. will have to wait a bit longer.

Last year, in her first on-the-record meeting with foreign reporters, Huawei Chief Financial Officer Cathy Meng said the telecom equipment giant would be more open about its ownership. She said at the time that founder Ren Zhengfei, her father, owned a 1.4% stake and that the remaining shares were held by between 64,000 and 65,000 of the company’s employees.

Huawei technical staff in uniform listen to British Chancellor of the Exchequer George Osborne (unseen) during his visit to the Huawei headquarters in the southern Chinese city of Shenzhen in this October 16, 2013 file photo.

Reuters

Ms. Meng met with reporters again on Wednesday to offer the company’s operating income estimate for 2013, which it expects will show a big jump. But on employee share ownership, she said Huawei wouldn’t provide any additional information for now.

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The reason, she said, was employee privacy.

“Our executive management team has already reached a consensus,” she said. “We want to release the ESOP (employee stock-ownership plan) list. But our company is an employee-held company. There are 70,000 employees holding company shares. So that is a matter of employees’ privacy.”

“We have to ask the permission of the employees,” she continued. “So it’s not just about the willingness of the company to release the data. It’s also the willingness of the employees to release the data.”

Ms. Meng said she didn’t have a timetable for the release.

Huawei’s ownership structure has been a key issue as the Chinese company disputes accusations from officials in the U.S. and Europe that it is ultimately controlled by Beijing. In a 2012 report by U.S. Congressional investigators (pdf), staffers said they were rebuffed by company officials when they asked for more details. “Better information about Huawei’s corporate structure would also help answer lingering questions caused by Huawei’s historic lack of transparency,” it said. “For years, analysts have struggled to understand how Huawei’s purported employee-ownership model works in practice, and how that ownership translates into corporate leadership and decision-making.”

The company denies direct involvement in its operations by Beijing and said its equipment doesn’t present a security risk.

Ms. Meng also said the company plans to expand a share compensation plan for its expanding roster of foreign employees. Called the time-based unit plan, it is designed to give foreign employees compensation similar to that available to Chinese employees through it share-ownership plan. The units don’t have voting rights, she said. She didn’t disclose additional details about the plan.

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